Review of 8 Years of Make in India

WHY IN NEWS:

• The Government's flagship programme 'Make in India' completed eight-year on September 25, 2022.
• As ‘Make in India’ completes 8 years, annual FDI doubles to USD 83 billion.
  • FDI inflows in India stood at USD 45.15 billion in 2014-2015 and have since consecutively reached record FDI inflows for eight years.
  • The year 2021-22 recorded the highest ever FDI at $83.6 billion.

ABOUT MAKE IN INDIA:

• Make in India is the flagship programme of the Government of India designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best in class manufacturing infrastructure in the country.
• The primary objective of this initiative is to attract investments from across the globe and strengthen India’s manufacturing sector.
• It is being led by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India.
• The three major objectives are:
  • (a) To increase the manufacturing sector’s growth rate to 12-14% per annum in order to increase the sector’s share in the economy
  • (b) To create 100 million additional manufacturing jobs in the economy by 2022
  • (c) To ensure that the manufacturing sector’s contribution to GDP is increased to 25% by 2022 (revised to 2025)
• The initiative is an open invitation to potential investors and partners across the globe to participate in the growth story of ‘New India’. 
• Make in India has substantial accomplishments across 27 sectors. These include strategic sectors of manufacturing and services as well.

ACHIEVEMENTS OF MAKE IN INDIA:

• Ease of doing business:
  • Steps taken to improve ease of doing business include simplification and rationalisation of existing rules.
  • As a result of the measures taken to improve the country’s investment climate, India's rank in ease of doing business according to World Bank report has improved from 142 in 2014 to 63 in 2022.
• Increase in investment:
  • To attract foreign investments and thereby strengthen Make in India initiative, Government of India has put in place a liberal and transparent policy wherein most sectors are open to FDI under the automatic route.
  • FDI inflows in India stood at US $ 45.15 billion in 2014-2015 and have since consecutively reached record FDI inflows for eight years.
  •  The year 2021-22 recorded the highest ever FDI at $83.6 billion.
  • On the back of economic reforms and Ease of Doing Business in recent years, India is on track to attract US$ 100 Bn FDI in the current FY.
• Boost to MSMEs:
  • The ‘zero defect zero effect’ phrase which came with Make in India campaign has shown positive impact on the Micro, Small and Medium Enterprises (MSMEs) of India.
  • As a result, many companies are manufacturing goods with ‘zero defects’ and ensuring that the goods have ‘zero effect’ on the environment.
• Accountability:
  • The implementation of Goods and Services Tax (GST) and demonetisation has made the industry as a whole much more transparent and accountable.
  • Now the processes have been simplified such as obtaining licenses and clearances that have brought in more transparency into the system.
  • The digitisation initiative that is part of Make in India has helped make processes much more transparent and easier to implement.

CHALLENGES ASSOCIATED WITH MAKE IN INDIA:

• Too much reliance on foreign capital:
  • Most of the schemes under Make in India relied too much on foreign capital for investments and global markets for produce.
  • This created an inbuilt uncertainty, as domestic production had to be planned according to the demand and supply conditions elsewhere
• ‘Make in India’ has been plagued by a large number of under-prepared initiatives:
  • The implementation deficit has resulted in large number of stalled projects in India
• Overestimation of the implementation capacity of the government:
  • Make in India set out too ambitious growth rates for the manufacturing sector to achieve.
  • An annual growth rate of 12-14% is well beyond the capacity of the industrial sector
  • Historically India has not achieved it and to expect to build capabilities for such a quantum jump is perhaps an enormous overestimation of the implementation capacity of the government
• Loss of policy focus:
  • The initiative brought in too many sectors into its fold. This led to a loss of policy focus.
  • Further, it was seen as a policy devoid of any understanding of the comparative advantages of the domestic economy.
• The initiative is ill-timed:
  • Given the uncertainties of the global economy and ever-rising trade protectionism, the initiative was spectacularly ill-timed.

CONCERNS:

• Negligence of Agriculture
  • The most negative impact of the Make in India campaign will be in the agriculture sector of India.
  • It is a well-known fact that Indian Territory has 61% cultivable land. With the introduction of industrial sectors, the agriculture in India will be neglected.
• Depletion of Natural Resources
  • Since Make in India is primarily based on manufacturing industries, it demands the set-up of various factories. Usually, such projects consume the natural resources such as water, land etc. on a large scale.
• Disruption of Land
  • With the emphasis being given to the Make in India campaign, thousands of companies would come forth to set up their factories on the land which could be used for cultivation. Eventually, this set up of manufacturing factories would lead to the permanent disruption of the agrarian land in the near future.
• Pollution
  • One of the biggest problems which are prevailing in India is pollution. According to statistics, India has a pollution index of 76.50.
  •  With the make in India movement, this pollution level is likely to arise in a couple of years.

GOVERNMENT INITIATIVES TO STRENGTHEN MAKE IN INDIA:

• Production Linked Incentive (PLI) :
  • This scheme across 14 key manufacturing sectors was launched in 2020-21 as a big boost to Make in India initiative. The PLI Scheme incentivises domestic production in strategic growth sectors where India has comparative advantage.
• Scheme to boost semiconductor design and manufacturing:
  • Recognising the importance of semiconductors in the world economy, the Government of India has launched a USD 10 billion incentive scheme to build a semiconductor, display, design ecosystem in India.
• National Single Window System (NSWS):
  • National Single Window System (NSWS) has been soft-launched in September 2021 to improve the ease-of-doing-business by providing a single digital platform to investors for approvals and clearances. This portal has integrated multiple existing clearance systems of the various Ministries/Departments of Government of India and State Governments to enhance the investor experience.
• Gatishakti programme:
  • Prime Minister’s Gatishakti programme, which will ensure logistical efficiency in business operations through the creation of infrastructure that improves connectivity. This will enable faster movement of goods and people, enhancing access to markets, hubs, and opportunities, and reducing logistics cost.
• One-District-One-Product (ODOP)initiative:
  • This is another manifestation of the 'Make in India' vision for facilitating promotion and production of the indigenous products from each district of the country and providing a global platform to the artisans and manufacturers of handloom, handicrafts, textiles, agricultural and processed products, thereby further contributing to the socio-economic growth of various regions of the country.
• To strengthen Make in India initiative, several other measures have been taken by the Government of India.
  • The reform measures include amendments to laws, liberalization of guidelines and regulations, in order to reduce unnecessary compliance burden, bring down cost and enhance the ease of doing business in India.
  • Additionally, Labour reforms have brought flexibility in hiring and retrenchment.
  • Quality control orders have been introduced to ensure quality in local manufacturing.
  • Steps to promote manufacturing and investments also include reduction in corporate taxes, public procurement orders and Phased Manufacturing Programme.

WAY FORWARD:

• Simplifying tax system:
  • The complex taxation system, a huge amount of paperwork and corruption is a main cause of worries among the investors.
  • Reducing number of taxes required to pay annually, reducing the number procedures to be followed and simplifying and rationalizing GST rates is the need of the hour
• Land reforms:
  • Stringent land acquisition laws make it difficult for India to attract investors in the manufacturing sector.
  • India’s benchmark land acquisition law can be amended to make it easier to buy land for defence and development projects in the fast-growing economy, while also ensuring the rights of farmers.
• Skill training:
  • Despite various government efforts like Skill India initiative, Yuva Kaushal Kendra etc., India still lags behind other nations in imparting skill training.
  • Integration of skill education with the formal education, reforms in Skill Sector Councils, innovative funding model of skill training institutes, establishment of Skill Development University etc. need to be done

PRACTICE QUESTION:

Q. “Make in India has not yet achieved its goals”. Critically analyse the progress made by India in the manufacturing sector through the 'Make in India' initiative.